Editorial: Payback time -- L.A. County owes millions to its cities; it should pay up

The California Supreme Court ruled last week that Los Angeles County improperly withheld millions of tax dollars from its cities. The county now must repay those millions without delay.

That's an important fiscal boost to the 47 L.A. County cities that were plaintiffs in the suit on which the high court ruled -- and to the remaining 41 cities, including Los Angeles, that did not take part in the suit. The ruling will mean about $10 million a year total to the county's 88 cities going forward, and $40 million statewide. This is money that cities really need.

The holdup, however, is the issue of exactly how far back L.A. County must go in its repayments to cities. The refunds could involve just this year, as the county argues, or go back several years, as the cities maintain. At this point, it appears that cities won't get their refunds until that decision is made months from now.

That's not acceptable. The county should immediately refund the current year's taxes to the 47 cities that sued, since the Supreme Court ruling makes it clear that at least that much is due. Budgets are tight for the county too, of course. But it's the cities' money, not the county's.

According to estimates by the cities' attorneys, a year's refund would mean, for example, a whopping $654,000 to Long Beach and $283,000 to Santa Clarita.

For Pomona, which would receive $239,000, the refund represents nearly 60 percent of the meager budget for its beleaguered public library, which is open just 20 hours a week.

The other 46 cities that sued might be in better fiscal shape, but undoubtedly getting their money back soon -- not after another string of court dates -- would help them all out.

The particulars of the cities' lawsuit against L.A. County are dazzlingly complex -- and a direct result of the wacky way the state Legislature moves pots of money around to patch the holes that pop up in government budgets. In summary:

In the early 1990s, in response to a state budget deficit, the Legislature created the Education Revenue Augmentation Fund, shifting property taxes from local governments to schools so that the state could reduce its own support of education. ERAF money cannot be factored into the administrative fees counties charge to handle cities' property tax revenue.

Then in 2004, after voters passed Gov. Arnold Schwarzenegger's $15 billion bond measure to get the state out of another budget deficit, something known as the "Triple Flip" shifted some property taxes from local governments to the state to pay off the bonds, shifted some ERAF money from schools back to local governments, and backfilled the schools' loss with state money.

Then came the "Vehicle License Fee Swap," moving more property taxes from schools back to local governments to make up for the loss of VLF revenue after the fee was slashed.

In 2007 L.A. County and other counties decided the Triple Flip and VLF Swap money that replaced ERAF money should not be exempt from fees, and started keeping the extra money. The Supreme Court ruled last week that the "plain language" of state law does not support the counties' interpretation, and the money must be repaid to cities.